Application of Financial Responsibility Rules Relating to the Downgrade of U.S. Long-Term Credit Rating

FINRA RN 11-38

August 8, 2011

FINRA published a notice providing guidance to firms on the effect of the downgrade of the United States long-term credit rating under the SEC Net Capital and Customer Protection rules. Generally, there is no change in firms' responsibilities under the rules after the ratings change. Under the Net Capital Rule, FINRA and the SEC affirmed that there is no change in the capital treatment of government securities under Rule 15c3-1(c)(2)(vi)(A). In addition, the notice confirms that the ratings downgrade has no effect on the definition of "qualified security" under the Customer Protection Rule.

Cross References

Exchange Act Rules 15c3-1 and 15c3-3